General Manufacturing Industry

Machinery and Equipment (M&E) Sales & Use Tax Exemption

Available To:
Manufacturers and processors for hire performing manufacturing and R&D. Testing operation for a manufacturer and processor for hire.

Qualifying Activity:
Purchase of qualifying machinery and equipment used directly in a manufacturing operation or research and development performed by a manufacturer, or testing operations performed for a manufacturer.

Annual Letter/Report due by the last day of the month immediately following the end of the four consecutive full calendar quarter period for which a credit is earned. Mailed by Department to applicants.

Contact
For questions about the program or the application, please call the Special Programs Division at (360) 534-1503.

Aerospace Industry

Reduced B&O Tax Rate for Aerospace Businesses

Reduced B&O Tax Rate for Aerospace Businesses

Available to:
Manufacturers and processors for hire of commercial airplanes or component parts of commercial airplanes, non-manufacturers engaged in the business of aerospace product development, certificated FAR repair stations making retail sales, and aerospace tooling manufacturers.

Qualifying Activity:Manufacturers and Processors for Hire: Manufacturing, and sales by the manufacturer, of commercial airplanes or component parts of commercial airplanes; or tooling especially designed for use in manufacturing commercial airplanes and component parts of commercial airplanes.

Contact
For questions about the program, call Aaron Deggs at (360) 705-6643.

For questions about the report, call Taxpayer Account Administration at (360) 902-7167.

B&O Credit for Preproduction Development Expenditures

B&O Credit for Preproduction Development Expenditures

Available to:
Manufacturers and processors for hire of commercial airplanes or component parts of commercial airplanes, non-manufacturers engaged in the business of aerospace product development, certificated FAR repair stations making retail sales, and aerospace tooling manufacturers.

Contact
For questions about the program, call Aaron Deggs at (360) 705-6643.

For questions about the affidavit, call Brian O'Sullivan at (360) 902-7086.

For question about the report, call Taxpayer Account Administration at (360) 902-7167.

B&O Credit for Property/Leasehold Taxes paid on Aerospace Business Facilities

B&O Credit for Property/Leasehold Taxes paid on Aerospace Business Facilities

Available to:
Manufacturers and processors for hire of commercial airplanes or component parts of commercial airplanes, non-manufacturers engaged in the business of aerospace product development, certificated FAR repair stations making retail sales, and aerospace tooling manufacturers.

Qualifying Activity:For Manufacturers:
Payment of property/leasehold taxes on new buildings, land, the increased value of renovated buildings, and equipment eligible for the machinery and equipment (M&E) exemption that is used exclusively in manufacturing commercial airplanes or components of such airplanes; or in manufacturing tooling specifically designed for use in manufacturing commercial airplanes or components of such airplanes.

For Certificated FAR Part 145 Repair Stations and Aerospace Non-manufacturers: Payment of property/leasehold taxes on new buildings, land, the increased value of renovated buildings, and qualifying computer equipment and peripherals used exclusively in aerospace product development or in providing aerospace services.

Available to:
Manufacturers and processors for hire of commercial airplanes or component parts of commercial airplanes, non-manufacturers engaged in the business of aerospace product development, certificated FAR repair stations making retail sales, and aerospace tooling manufacturers.

Qualifying Activity:
Purchases of computer hardware, software, and computer peripherals, and charges for labor and services related to the installation of such equipment.

Contact
For questions about the program, call Aaron Deggs at (360) 705-6643.

Retail Sales and Use Tax Exemption for the Construction of New Facilities Used to Manufacture Commercial Airplanes, Fuselages or Wings of Commercial Airplanes

Retail Sales and Use Tax Exemption for the Construction of New Facilities Used to Manufacture Commercial Airplanes, Fuselages or Wings of Commercial Airplanes.

Available to:
Manufacturers who construct new buildings and/or new parts of buildings that will be used primarily to manufacture commercial airplanes, commercial airplane fuselages, and commercial airplane wings. Also available to port districts, political subdivisions, or municipal corporations when they construct new facilities to lease to these manufacturers. Effective July 9, 2014.

Qualifying Activity:
The buildings must be used primarily to manufacture commercial airplanes, commercial airplane fuselages and commercial airplane wings as defined in RCW 82.32.550 and RCW 82.32.850.

Contact
For questions about the program, call Beth Mills at (360) 705-6642.

B&O Tax Deduction for Manufacturers of Dairy Products

B&O Tax Deduction for Manufacturers of Dairy Products

Available to:
Dairy product manufacturers.

Qualifying Activity:
Manufacturing dairy products; and

Selling at retail or wholesale dairy products manufactured by the seller to purchasers who the goods out of this state; and

Effective October 1, 2013, wholesale sales by dairy product manufacturer to a customer who uses such dairy products as an ingredient or component in the manufacturing of another dairy product in Washington.

Contact
For questions about the program, call Beth Mills at (360) 705-6642.

Reduced B&O Tax Rate for Manufacturing Wood Biomass Fuel

Reduced B&O Tax Rate for Manufacturing Wood Biomass Fuel

Available to:
Manufacturers of wood biomass fuel.

Qualifying Activity
Manufacturing wood biomass fuel.

Reporting/Documentation:

No application

No Annual Survey/Report

Electronic filing not required

No expiration date

Effective July 1, 2009, manufacturers of biodiesel fuel, biodiesel feedstock, and alcohol fuel no longer qualify for the reduced rate. They must file under the general "Manufacturing" B&O tax classification of 0.484%. (RCW 82.04.260 (1)(e))

Contact
For questions about the program, call Beth Mills at (360) 705-6642.

B&O Tax Deduction for Sales of Biofuels

B&O Tax Deduction for Sales of Biofuels

Available to:
Retail sellers and distributors of biodiesel fuel and E85 motor fuel. Note: Effective July 22, 2007, “E85 motor fuel” replaces “alcohol fuel.”Qualifying Activity
When calculating the B&O tax, a deduction may be claimed for amounts received from the retail sale or distribution of:

Biodiesel fuel; or

E85 motor fuel.Reporting/Documentation:

No application

No Annual Survey/Report

Electronic filing not required

Expires July 1, 2015

The deduction as it applies to sellers of wood biomass fuel expired July 1, 2009. (RCW 82.04.4335)

Qualifying Activity
Purchases of machinery and equipment or services to construct structures, including charges for installing, constructing, repairing, cleaning, decorating, altering, or improving the structures or machinery and equipment, used directly for the retail sale of a biodiesel blend or E85 motor fuel.

Purchases of fuel delivery vehicles or charges for installing, repairing, cleaning, altering, or improving the vehicles including repair parts and replacement parts if at least seventy-five percent of the fuel distributed by the vehicles is a biodiesel blend or E85 motor fuel.

Available to:A person who sells electricity, natural gas or manufactured gas to an aluminum smelter in Washington State..

Qualifying Activity:To qualify for the credit a person must sell electricity, natural gas, or manufactured gas to an aluminum smelter. The credit is equal to the gross amount of sales to the aluminum smelter by the corresponding rate of Business & Occupation (B&O) Tax and/or Public Utility Tax (PUT) but only when it’s specified in a contract that the price of the electricity or gas sold to the smelter will be reduced by an amount equal to the credit.

Qualifying Activity:
Purchases that become an ingredient or component of existing livestock nutrient management equipment and facilities or services provided for operating, repairing, cleaning, altering, or improving this equipment and facilities.

Sales/Use Tax Exemption for Anaerobic Digesters

Qualifying Activity:
Purchases of tangible personal property that becomes an ingredient or component of the anaerobic digester and charges for installing, repairing, constructing, cleaning, altering or improving the anaerobic digester .

Renewable Energy/Green Incentives

Available to:
Manufacturers, manufacturers that sell their product at wholesale, and processors for hire of solar energy systems and specified components of solar energy systems using photovoltaic modules or stirling converters.

Qualifying Activity:
Reduced B&O tax rate of 0.275% for manufacturers, manufacturers that sell their product at wholesale, and processors for hire of solar energy systems and specified components of solar energy systems using photovoltaic modules or stirling converters.

Reporting/Documentation:

No application required

Effective October 1, 2013, Annual Tax Incentive Survey must be filed electronically by April 30th of the year, following the year in which the preferential rate is claimed.

Solar systems up to 10kW:
Effective July 1, 2009 through June 30, 2018, purchases of machinery and equipment that will be used directly in a facility that generates no more than ten kilowatts of electricity using solar energy are exempt from sales/use tax. Also exempt are labor charges to install such equipment. The sales tax exemption is taken at the point of sale. The buyer must provide a completed Buyer's Retail Sales Tax Exemption Certificate to the seller and/or installer.

Expires June 30, 2018.

Solar Thermal Heat

Effective July 1, 2013, the 100% sales/use tax exemption was extended to solar thermal heat systems capable of producing no more than 3 million British thermal units per day that use a solar collector or a solar hot water system.

Expires June 30, 2018.

Solar systems greater than 10kW and other qualified renewable energy systems 1kW or greater:
On July 1, 2011, certain purchases will no longer be exempt at the point of sale, but will require the buyer to pay the sales tax to the seller and installer, and then apply to the Department of Revenue for a refund equal to 75 percent of the tax paid. This refund program applies to:

Available to:
Individuals, businesses, local government entities that are not in the light and power business or gas distribution business, and participants in a community solar project.

Qualifying Activity:Except for a community solar project, participants must generate electricity on their own property with an anaerobic digester, wind generator, or solar energy system and apply to their light and power company for a payment based on kWhs produced and type of equipment used to produce the electricity.

Reporting/Documentation:

Interested persons should contact their light and power company and find out if the company participates in the program. Light and power companies are not required to participate.

Contact
For a copy of your certification or approval letter, call (360) 902-7003.

For questions about the program, call Beth Mills at (360) 705-6642.

Clean Alternative Fuel Vehicles – Sales/Use Tax Exemption

Clean Alternative Fuel Vehicles – Sales/Use Tax Exemption

Available To:
Any person.

Qualifying Activity: From July 1, 2009 through June 30, 2015:
Purchase or lease of a new passenger car, light duty truck, and medium duty passenger vehicle that is powered exclusively by clean alternative fuels.

From July 15, 2015 through June 30, 2019:
Purchase or lease of a new passenger car, light duty truck, and medium duty passenger vehicles which is:

powered exclusively by clean alternative fuels; or

a plug-in hybrid capable of traveling at least 30 miles using only battery power.

The exemptions are limited to clean alternative fuel vehicles or plug-in hybrids whether sold or leased for $35,000 or less. The $35,000 cap includes the amount of any traded-in vehicle.

For leases signed on qualified clean alternative fuel vehicles before July 1, 2015, lease payments will continue to be exempt from sales tax regardless of the fair market value of the lease.

Available to:B&O credit is available to harvesters of forest-derived biomass.
Sales and use tax exemption is available on purchases of hog fuel.
“Hog fuel” is defined as wood waste and other wood residuals including forest-derived biomass. Does not include firewood or wood pellets.

Qualifying Activity:B&O credit for harvesters of forest-derived biomass sold, transferred, or used for production of electricity, steam, heat, or biofuel.
B&O credit amount is based on harvested green ton of forest-derived biomass:

Harvested July 1, 2010, through June 30, 2013:

$3 per harvested green ton

Harvested July 1, 2013, through June 30, 2015:

$5 per harvested green ton

B&O credit expires June 30, 2015

Sales and use tax exemption on purchases of hog fuel to produce electricity, steam, heat, or biofuel.

Qualifying Activity:
Creating permanent full-time positions in international services located in a Community Empowerment Zone (CEZ) or designated International Services District. International services must be provided to persons domiciled outside the United States or be for use primarily outside this country.

Credit Amount:
$3,000 per year for each qualified employment position created. Additionally, $3,000 in credit can be taken in each of the following four years if the position is maintained.

Reporting/Documentation:

No application

No Annual Survey/Report

Electronic filing not required

Maintain records necessary for the department to verify eligibility:

Employment records for the previous six years;

Information relating to description of international service activity engaged in at the eligible location by the person; and

Information relating to customers of international service activity engaged in at that location by the person.

Power for Electrolyte Processing – Public Utility Tax Exemption

Available to:Light and power businesses that provide electricity to electrolytic processing businesses.

Qualifying Activity:Public Utility Tax exemption on sales of electricity made by a light and power business to a chlor-alkali electrolytic processing business or a sodium chlorate electrolytic processing business for the electrolytic process if the contract for sale of electricity to the business contains the following terms:

(a) The electricity to be used in the electrolytic process is separately metered from the electricity used for general operations of the business;

(b) The price charged for the electricity used in the electrolytic process will be reduced by an amount equal to the tax exemption available to the light and power business under this section; and

(c) Disallowance of all or part of the exemption under this section is a breach of contract and the damages to be paid by the chlor-alkali electrolytic processing business or the sodium chlorate electrolytic processing business are the amount of the tax exemption disallowed.

Contact
For questions about the program, call Beth Mills at (360) 705-6642.

Newspapers - Reduced B&O tax rate for publishers

Newspapers - Reduced B&O tax rate for publishers

Note: Engrossed Senate Bill 6635 temporarily amends the definition of "newspaper" and adjusts the B&O tax rate for printers and publishers of newspapers. See our special notice "Printers and Publishers of Newspapers: B&O Tax Changes and Definitions" for more information.

Available to:
Printers and publishers of newspapers. See RCW 82.04.214 for the definition of “newspaper”

Qualifying Activity:The reduced rate of 0.2904 percent is available for businesses engaged in the printing and/or publishing of newspapers. Note: Effective July 1, 2012, the definition of newspaper is revised to include electronic (online) versions of newspapers. Therefore income associated with electronic versions of newspapers is subject to B&O tax under the printers and publishers of newspapers classification effective July 1, 2012. This provision expires July 1, 2015.